State Controller John Chiang dropped a political bomb the other day, although he was so quiet about it, one could say it was a stealth bomb.
Chiang added public pension systems to his already large fiscal database. One chart reveals that their “unfunded liabilities” – the gap between assets and liabilities for current and future pensions – exploded from $6.3 billion in 2003 to $198.2 billion in 2013.
Moreover, that startling number assumes that pension systems will see asset earnings of about 7.5 percent a year – a number that some are beginning to see as unattainable.
Read more here: http://www.sacbee.com/news/politics-government/dan-walters/article3507521.html#storylink=cpy
There is no evidence that returns have been close to 7.5% over the last 15 years. Many pension funds still assume that unrealistic RoR of 7 to 8%. If benefits are inflation protected then this is a monster of a problem. The time to kill the taxpayer guarantees for these pensions is now. No bailouts of pensions.